Course Content
Introduction
The stock market is a marketplace where shares of publicly listed companies are bought and sold. It plays a central role in the modern economy, acting as a bridge between businesses that need capital and investors who have money to invest. The origins of the stock market trace back to the early 1600s, when the Dutch East India Company issued the first shares on the Amsterdam Stock Exchange. This allowed the company to raise money from the public to fund its trade ventures, in return for a share of the profits. Over time, this concept evolved, and today, stock markets exist all over the world, with major exchanges like the New York Stock Exchange (NYSE), NASDAQ, and London Stock Exchange facilitating trillions of dollars in trade. At its core, the stock market enables businesses to grow. By offering shares to the public through a process called an Initial Public Offering (IPO), companies can raise large amounts of money to expand operations, invest in research, or develop new products—without having to rely solely on banks or private lenders. In return, investors get the opportunity to share in the company’s success through rising share prices and dividends. Investing in the stock market can be a powerful way to build wealth over time. Wise investments in strong companies can generate solid returns, especially when held for the long term. Many individuals have grown their savings substantially by investing in companies that have thrived. However, it’s important to remember that the stock market carries risks. Prices can go up, but they can also go down—sometimes sharply. Economic downturns, company mismanagement, or shifts in the global market can all lead to losses. For beginners, it's essential to approach investing with caution, avoid chasing “get rich quick” schemes, and take the time to understand what you're investing in. In short, the stock market is a powerful tool for economic growth and personal financial development—but like all tools, it must be used wisely.
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Introduction
Stock Markets Around The World
Listing On A Stock Market
How Stocks are Bought and Sold
Trade Date vs Settlement Date, What is T + 2?
What Is A Stock Market Index?
ETF’s and Index Funds
Fundamental Analysis
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Fundamental Analysis Introduction
Understanding Revenue and Profit
Earnings Per Share and PE Ratio
Understanding the Balance Sheet
Understanding Cashflow
Dividends – How Investors Earn Income From Their Shares
What Causes Stock Prices To Rise And Fall
Understanding Market Capitalization
Technical Analysis
Along with Fundamental Analysis, Investors increasingly rely on Technical Analysis to decide whether to buy or sell a stock. Here we will explore the main techniques.
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Introduction to Technical Analysis
How To Read A Price Chart – The Basics
Understanding Support and Resistance Levels
Identifying Trends and Drawing Trendlines
Understanding Moving Averages
Introduction to Momentum Indicators
Chart Patterns – Spotting Setups in the Market
Volume – The Power Behind a Price Movement
Investing Safely and Profitably
How do professionals invest safely and profitably? Some key concepts such as position sizing and stop losses.
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How To Place Trades And Manage Risk
Using A Trailing Stop To Protect Profits and Limit Loss
Diversification and Portfolio Management
Taking Profits
Common Investor Mistakes And How To Avoid Them
A Quick Word On Taxes
Summary and Beginner’s Checklist
10 Must Read Books for Investors and Traders
Beginners guide to investing in the Stock Market

Introduction to Momentum Indicators

 

Momentum indicators are tools that help investors measure the speed and strength of a price movement.

 

Just like a car moving fast has momentum, a stock with strong buying (or selling) pressure is said to have momentum.


These indicators help answer questions like:

  • Is the stock overbought or oversold?

  • Is the trend gaining strength or weakening?

  • Might the price be about to reverse direction?

 

Momentum indicators are especially useful when combined with:

  • Trendlines

  • Moving averages

  • Support and resistance

 

 

Common Momentum Indicators

 

Here are three of the most widely used momentum indicators:

 

 

1. RSI – Relative Strength Index

RSI measures how fast and how far a stock has moved recently.

 

Scale: 0 to 100

  • Above 70 = Stock is overbought (may fall soon)

  • Below 30 = Stock is oversold (may rise soon)

 

Typical Use:

  • Spot possible reversals

  • Confirm price momentum in trends

 

RSI works best in ranging or sideways markets, and can also confirm bullish or bearish divergences.

 

 

2. MACD – Moving Average Convergence Divergence

 

MACD tracks changes in momentum using two moving averages.

 

It has 3 main parts:

  • MACD Line: Difference between two EMAs (usually 12-day and 26-day)

  • Signal Line: 9-day EMA of the MACD Line

  • Histogram: Shows the difference between the MACD Line and Signal Line

 

Buy Signal: MACD Line crosses above Signal Line


Sell Signal: MACD Line crosses below Signal Line

 

MACD is helpful for spotting trend reversals and momentum shifts — especially after strong price moves.

 

 

3. Stochastic Oscillator

 

This indicator compares a stock’s current price to its range over a set time period.

 

Like RSI, it ranges from 0 to 100:

  • Above 80 = Overbought

  • Below 20 = Oversold

 

It uses two lines — %K and %D — and signals are generated when they cross each other.

 

Often used in short-term trading, especially in sideways markets.

 

 

How Momentum Indicators Help Traders

 

  • Spot entry and exit points

  • Confirm or challenge price trends

  • Identify early signs of reversals

  • Gauge if a stock is too hot or too cold (overbought/oversold)

 

But remember: momentum doesn’t always equal direction — a stock can be overbought and still go higher!

 

 

Combining Momentum with Other Tools

 

Momentum indicators work best when used with other tools, such as:

  • Price action

  • Trendlines and moving averages

  • Volume analysis

  • Support and resistance

 

Example strategy:

  • Stock breaks out above resistance

  • RSI confirms strong momentum

  • MACD crossover supports the move
    → This gives a higher confidence buy signal

 

 

Summary

 

Momentum indicators are designed to show how strong or weak a price move is, helping investors:

  • Spot reversals

  • Confirm trends

  • Identify high-probability entry points

 

Key indicators:

  • RSI: Overbought/oversold

  • MACD: Trend and momentum shifts

  • Stochastic Oscillator: Short-term price extremes

 

Used correctly, momentum indicators can add an extra layer of timing and confidence to your trading strategy.

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Stock Market Course